Mid-Day Gold & Silver Market Report – 5/4/2014

Peter LaTona

6/4/2014 2:06:00 PM

STEVE FORBES: LINK DOLLAR TO GOLD OR FACE GREAT DEPRESSION II

Steve Forbes, publisher of Forbes Magazine, is not a fan of the Federal Reserve’s loose monetary policies. In fact, he has issued a warning that the U.S. might experience an economic catastrophe as a result of these policies. In his opinion there is a solution, return to a strict Gold standard whereby paper currencies have to be backed by Gold. "The best way to achieve monetary stability: linking the dollar to gold,” Forbes wrote in the book out today. “The Fed should have only two tasks: keeping the dollar fixed to gold and dealing quickly and decisively with panics.” Forbes blames the Federal Reserve quantitative easing programs for the weak economic recovery; slower long-term growth and high unemployment; high food and fuel prices; bigger government and larger government debt; increased probability of currency crisis.

The governing council of the European Central Bank (ECB) meets this Thursday and they are expected to announce new policies to loosen money supply. There is speculation that the ECB might offer negative interest rates. In two weeks, the Federal Reserve is expected to announce a continued tapering in the quantitative easing policy.  This places the two continents heading in different directions and there could be negative consequences. As the rest of the world steps up easy money policies in a deliberate effort to drive down their currency, thus boosting exports to assist their struggling economy, the U.S. is not and the dollar goes up against other currencies. This is not good news for U.S. export and we saw today that the U.S. trade gap was much wider than anticipated. Also in play, we should expect the U.S. to begin experiencing higher interest rate in 2015, while Europe may not.

At 2 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,245.70, Down $0.80.
• Silver, $18.84, Up $0.02.
• Platinum, $1,439.40, Up $4.90.
• Palladium, $837.40, Up $0.70.

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